When is the median voter paradigm a reasonable guide for policy choices in a representative democracy?

The median voter paradigm (MVP) has been widely used to study the interactions between economic and political behavior. While this approach is easy to work with, it abstracts from institutional detail. This paper explores whether the MVP leads on average to the same policies that would be chosen in a two-party representative democracy (RD). When it does not, the paper fully characterizes the size and magnitude of the average divergence (or bias) between policy choices in MVP and in RD in terms of the degree of polarization between the parties, their relative electoral prospects, and the distribution of electoral uncertainty. The results are then applied to the influential Meltzer and Richard (1981) theory of the size of government.